Europe: Shares close flat as tech losses overshadow strong BP results

[BENGALURU] European shares ended flat on Tuesday as rising bond yields pressured technology stocks, while a sharp fall in oil prices took the shine off strong earnings from oil company BP.

The benchmark Stoxx 600 closed largely unchanged.

Technology stocks were among the weakest performers, down 0.9 per cent as euro zone bond yields rose on speculation over faster-than-expected policy tightening by the European Central Bank.

ECB President Christine Lagarde had tried to appease rate hike jitters on Monday, saying there was no need for big monetary policy tightening in the euro zone as inflation could stabilise around 2 per cent.

"Lagarde's comments will be taken with a pinch of salt as the central bank has been behind the curve so much, at least until we start to see signs of inflation peaking and an indication that we'll see a significant decline," said Craig Erlam, senior market analyst at Oanda.

"But we haven't seen that yet, so reassurances are likely to fall on deaf ears."

Oil and gas stocks sank 1.8 per cent, tracking a near 2 per cent drop in crude prices, reflecting expectations US-Iran talks could revive an international nuclear deal and potentially increase supply to the market.

Energy group BP fell 2.4 per cent, even after reporting its highest profit in eight years in 2021 and boosting its share repurchase targets.

The Stoxx 600 index is struggling for direction following five consecutive weeks of losses in 2022, as jitters over interest rate increases and supply constraints are weighed against a positive fourth-quarter earnings season.

Markets are now pricing in 50 basis point rate increases for the euro zone this year but economists are cautious, with most predicting the first move either at the end of the year or early 2023.

European mining stocks rose 2.2 per cent and were the strongest performers of the day, tracking strong gains in metal prices on hopes for increased demand in major importer China.

Among other stocks, car maker Stellantis rose 0.8 per cent after it unveiled its new Alfa Romeo Tonale SUV, as it aims to expand in the premium market and pivot further to electric vehicles.

EDF fell 1.3 per cent, after the French state-controlled power group made new cuts to its nuclear output projections.

French bank BNP Paribas fell 0.5 per cent on reporting lower-than-expected pre-provision fourth-quarter profit hit by higher costs.

Swedish Security services group Securitas gained 1.5 per cent after posting higher quarterly profit and saying demand for airport security, which plunged early in the pandemic, was recovering. REUTERS